Sony Computer Entertainment Inc.’s previous-generation PlayStation 3 video game console was sold at a considerable loss early in its lifecycle because of very high costs of IBM Cell processor, Nvidia RSX graphics engine as well as Blu-ray disc drive, which resulted in $840 manufacturing costs. With the PlayStation 4 the company changed its design approach and adopted loads of off-the-shelf components. As a result, manufacturing cost of the PS4 is slightly lower than its retail price.

PS4: Only $381 to Make

According to preliminary results from the teardown analysis service at IHS, the bill of materials (BOM) for the PlayStation 4 amounts to $372. When the manufacturing expense is added in, the cost increases to $381. This comes in $18 lower than the $399 retail price of the console. When other expenses are tallied, Sony initially will still take a loss on each console sold. But the relatively low BOM of the PlayStation 4 will allow the company to break even or attain profitability in the future as the hardware costs undergo normal declines. Keeping in mind the fact that the average game attach rate to the console is three titles, it is likely that Sony does not make a lot of losses on the PS4 since it receives profits per every game.

The PlayStation 4 is more economical for Sony than even the revision of the PlayStation 3 torn down by IHS, which was shipped in 2009, a model dubbed the CECH-2001A. That version of the PlayStation 3 carried a $336 BOM and manufacturing cost compared to a $299 sales price.

The teardown assessment is preliminary in nature, accounts only for hardware and manufacturing costs, and does not include other expenses such as software, licensing, royalties or other expenditures.

“This time, Sony is on a greatly shortened path to the hardware break-even point, or even profitability, with its cost-conscious PlayStation 4 design. The company is pulling off this feat, despite offering a brand-new design that once again includes avant-garde components that yield superfast performance. The PlayStation 4 keeps a lid on costs by focusing all the additional expense on the processor and memory—and reducing outlays for the optical drive, the hard disk drive (HDD) and other subsystems,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS.

Big Chip = Big Savings

The costliest subsystems in the PlayStation 4 are the core processor and the associated graphic dynamic random access memory (DRAM), which together entail $188 – representing slightly more than 50% of the BOM of the entire console. This compares to only 29% for the fourth-generation PlayStation 3. For the PlayStation 4, Sony has integrated two functions – the core central processing unit (CPU) and graphics processing unit (GPU) – that were previously two discrete ICs.

Sony CXD90026G system-on-chip, which was designed by AMD, is manufactured under AMD supervision by TSMC in Taiwan and then packed and tested at AMD facilities in Malaysia. Photo by iFixit.com

“Sony clearly has made the decision to focus on balancing the brains and economics of the console, with the processor and memory dominating both the design and the BOM. This processor is a monster, with the surface area of the chip amounting to about 350mm2. That is three times larger than any other chip manufactured using equivalent-process technology that has been examined by the IHS teardown analysis service. Despite the remarkable silicon acreage of this device, it comes at a price point attractive to mainstream consumers while delivering a very high level of performance. Future versions, manufactured with even more advanced semiconductor processing technology, will further enhance both cost and performance,” said Jordan Selburn, senior principal analyst for consumer platforms at IHS.

The processor exhibits a high degree of integration, using advanced 28nm semiconductor manufacturing, and combining both the CPU and GPU into a single device. The Advanced Micro Devices processor includes an eight-core Jaguar CPU and a Radeon HD GPU with GCN architecture with 1152 stream processors. This processor costs $100.00, IHS estimates. While the price seems to be high, it is considerably lower than the amount of money Sony paid for the key PS3 logic back in 2006. Sony initially purchased Cell processor for $89 and was charged $129 for Nvidia RSX graphics engine inside the PS3.

Precious Memory

The cost increase for the DRAM is even more remarkable, at an estimated $88.00, up from just $9.80 for the fourth-generation PlayStation 3, i.e. the CECH-2001A. Note that the $9.80 total does not include the DRAM that was mounted directly to the Nvidia processor in the PlayStation 3 that IHS analyzed in 2009. This cost increase is due to the PlayStation 4’s adoption of 8GB of advanced GDDR5. On the other hand, 256MB of XDR memory initially cost Sony about $48.

“GDDR5 memory has much higher bandwidth than the DDR3 used in the Xbox One. It also works better with parallel computing and is designed specifically to enhance graphics performance. Because of its cutting-edge status, GDRAM GDDR5 is more expensive than DDR3, which is used in high volume in products including PCs and older game consoles,” said Mike Howard, senior principal analyst of DRAM and memory at IHS.

Major and Minor Components Get More Affordable

Despite of relatively high costs for the processor and memory, other components of the console cost equally or lower compared to current-generation PlayStation 3 and are clearly more affordable compared to components of the original PS3 from 2006.

The biggest area of cost reduction is in the optical drive, at only $28, compared to $66 for the CECH-2001A PlayStation 3. With the optical drive mechanism remaining largely unchanged since 2009, Sony was able to capitalize on the dramatic price erosion in this product during the past four years, according to IHS. The company paid whopping $125 for a BD drive in 2006.

Mainboard of Sony PlayStation 4. Click to enlarge. Photos by IHS and iFixit.com

Sony trimmed another $10 from the BOM by using a more integrated design overall for the PlayStation 4. The design allowed Sony to reduce the number of small-sized integrated circuits, discrete semiconductors and passive components. The total cost of these devices amounted to $40.00 in the PlayStation 4, down from $50.23 in the CECH-2001A PlayStation 3.

Mainboard of Sony PlayStation 4. Click to enlarge. Photos by IHS and iFixit.com

Another $5 reduction was achieved in the mechanical portion of the design, including enclosures – like plastics and metals – and in the electro-mechanical content, such as printed circuit boards, connectors and wire harnesses.

The hard disk drive in the PlayStation 4 is $1 cheaper than the one in the CECH-2001A PlayStation 3, despite a major jump in capacity to 500 gigabytes (GB), up from 120 GB. This cost reduction reflected the major decline in HDD costs during the past four years.

Discussion

great news that they are turning a profit with the ps4. and the ps4 is a great system I own one and I can tell you this I don't regret for one second buying it and this is an xbox fan or once was an xbox fan saying this. nba 2k14 looks amazing on the ps4 and it really shows what this console is capable of when it's being utilized. if you are on the fence about buying a ps4 or xbox one, my advice would be to get a ps4 you won't regret it if you are a true gamer.

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AMD will make +$400 Million profit on consoles in just this quarter. By cornering the gaming market, AMD will help itself to a multi-billion dollar a year profit in an industry worth $78 billion. Its only threat is Intel, since Nvidia will struggle over the next 5 years and will eventually be a target acquisition for its IP.

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Since AMD has locked up the entire console market now starting with the Wii U last year AMD is in a pretty good position for a while to come. AMD needed a sure thing that will continue to bring them revenue regardless of how the pc market does to fall back on and they did just that. If this was horse racing AMD pulled off the trifecta that's for sure.

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2.

I think its such a shame both Sony and MS tried to go so cheap with the hardware inside these units. They clearly underestimated how much people wanted a new console and how much they are willing to spend.

The PS4 and X1 will be sold out for months and months, but they would also have been sold out if they were $600, and at $600 they could have been genuinely next gen performance consoles not mid-range 2 year old PC performance!

These consoles are even struggling just to pull off 1080p on pretty bog standard games, yes things will improve as coders get used to the new architecture but i just feel this generation at launch are massively under powered, i dread to think how dated they will look in 5-10 years time!

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All the more reason not to put expensive hardware in them - better to make them cheaper. Technology is moving at such a rapid pace that this generation of consoles won't last anywhere near as long. With cloud gaming servers moving in on console territory, the consoles will have to update in 3-4 years to keep ahead of that experience for big production games.

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I would love you to be right linuxlowdown but i don't think we will see cloud gaming for a long time to come simply because not everyone who would spend money on a console has a fast enough or reliable enough internet connection, not to mention the fundamental problem on latencies that have to over come before we can out-source the commutation of consoles to the clouds.
As for the timing of the next console, unless they follow a very similar architecture (which they could easily now with the x86 + AMD graphics) then developers need minimum of 5 years to make enough money after learning all the new quirks of the consoles.

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Even porting over to a new platform, if the IDE and the software tool chain was constructed properly, any quirks should have been abstracted away from the majority of gaming programmers! The hardware quirks should only have been apparent to the driver and OS kernel programmers! Now that both the Xbox one, and the PS4, Have been released, and their system development kits are constructed, the only long term software costs should be bug fixes and platform tweaking. Users should expect, after the move to AMD x86 APUs, that updating the APU hardware should come at a faster pace, and adding a more powerfull APU should be a matter of attatching a newer APU to the motherboard, at the factory for APU updates, and some minor driver tweaking. Expect M$ to be the first to update their APU.

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It would be interesting if it was say a di-annual update and games were made like PC games where options are tuned on and off depending on your hardware configuration but in a far more controlled way than the PC world as the exact configuration would be know at the development stage.

It would have all the 'benefits' of consoles such as a simple to use, closed system but also the ability to keep pace with new developments. Would be good for hardware makers, goods for games, good for the industry as a whole.

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OK I'll bite but it will be a long read.

Relative performance of PS3/360 to PCs at the time
-> Was extremely exaggerated by most people who never dove deeper into the specs.CPU: PS3's Cell was less powerful per clock than a Pentium 4http://www.anandtech.com/show/1647/13

The Cell was actually a single core CPU with 7 SPE engines. The single core was only as powerful as each of the 3 Xbox 360 cores. The 7 SPE engines could not function as stand-alone CPUs, and were very difficult to utilize fully:http://www.guerrilla-game...eeuw-KZ2SPUsCaseStudy.pdf

Your assertion that current consoles are very underpowered vs. PCs is incorrect. PS360 were more underpowered in comparison.

You are also missing lower overhead for consoles vs. poor console porting to PC. Looking at performance of games like AC4 we see that PS4 shows impressive performance for the specs. On the PC at 1920x1080, the same resolution of PS4, you need an FX4300 or faster and HD7970Ghz/GTX680 level to get 29 30 fps minimums:http://gamegpu.ru/action-...-black-flag-test-gpu.html

PS4 is locked at 30 fps.

Also, did you play BF4 on PS4? No $600 PC will give you that level of performance with the cost of the OS, and so on.

Sure, 14nm Volta in SLI will smoke PS4/XB1 but you are being too negative on the current generation and are exaggerating how great PS360 were. As far as these consoles being outdated quickly, most of us have PCs and will buy consoles for their exclusives. I am no stressing that a game like Witcher 3 or Watch Dogs will look worse on PS4 than my PC. That's already understood. Not many people would pay $600 USD for PS4/XB1 after the first wave of early adopters dies down in 4-5 months.

You also didn't consider that Sony is 1/10th the size it used to be in early 2000s. They would never be able to manufacture a $700+ console and sell it for $499 as such losses are unsustainable as has been shown by PS3.